It seems participation in a regional trade agreement does not necessarily lead to a more liberal import regime.
Foroutan explores whether a systematic relationship exists between a developing country’s participation in a preferential regional trade agreement (RTA) and the restrictiveness of its trade regime.
The motivation for her study is provided by the current debate about whether regional trading blocs are a stepping-stone toward a more liberal global trading system and whether these blocs have changed over time so that the “new” blocs differ meaningfully from the “old” ones in terms of openness to the rest of the world.
She restricts analysis to reciprocal RTAs involving developing countries in partnership either with industrial countries (North-South RTAs) or with other developing countries (South-South RTAs).
Nearly every developing country belongs to one or more RTAs, so Foroutan develops criteria for distinguishing effective from noneffective regional blocs. She then taps into many sources of data to compare levels of restrictiveness.
She finds no evidence that participation in a regional trade agreement necessarily leads to a more liberal import regime.
This paper—a product of International Trade, Development Research Group—is part of a larger effort in the group to study preferential trade issues. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Lili Tabada, room MC3-333, telephone 202-473-6896, fax 202-522-1159, Internet address ltabada@worldbank.org. (34 pages)
The full report is available in PDF format.